Atlas Engineered Products is a buy, this analyst says

Atlas Engineered Products (Atlas Engineered Products Stock Quote, Chart, News, Analysts, Financials TSX:AEP) has added its ninth facility with the June acquisition of Truss-Worthy Construction Systems, a roof truss and engineered wood products supplier in Colborne, Ontario, Beacon Securities analyst Russell Stanley noted in a July 17 report. He maintained a “Buy” rating and $1.50 target price on the stock.

The update came as CMHC reported strong June housing starts at a seasonally adjusted annual rate of 284,000, well above the 265,000 consensus and up 6% from last year. Q2 housing starts reached almost 69,000 units, a 13% year-over-year increase and 52% higher than Q1’s seasonal low.

“This follows the acquisition of 42 acres of land in Colborne last December,” Stanley. “AEP paid $1.6M in cash for the business, and another $850k in cash for the land and facilities. For its LFY ended January 31st, Truss-Worthy produced normalized EBITDA of $355k on $2M in revenue (an 18% margin). Based on the 3-year average normalized EBITDA of $730, AEP paid less than 2.2x for the business operations (ex-land and buildings).”

Based in Nanaimo, B.C., Atlas Engineered Products designs, manufactures, and sells roof trusses, floor trusses and wall panels and distributes engineered wood products. Its customers include builders of residential and commercial wood-framed structures, such as single-family homes, townhouses, multi-story buildings, commercial spaces and agricultural facilities.

Stanley said Atlas continued its share buyback activity in May, repurchasing 70,000 shares at an average cost of $0.77 each. That followed 125,000 shares bought in April at an average of $0.84. So far this year, Atlas has repurchased a total of 320,000 shares at an average price of $0.88.

He also noted that Atlas is now trading at a 49% discount compared to its closest peer.

“AEP now trades at 9.6x our F2025 Adj EBITDA forecast, representing an 8% discount to the 10.4x at which Builders FirstSource (BLDR-NYSE, Not Rated) trades,” he said. “Looking into F2026, where AEP’s investments in robotics/automation should begin contributing to revenue, Atlas is trading at 4.7x our forecast, a 49% discount to BLDR at 9.2x. Potential catalysts include the closing of the Western Canada acquisition (likely July), the Q2 results in August (date TBA) and progress updates on the robotics investments.”

Stanley estimates that Atlas will generate $9-million in Adjusted EBITDA on $65-million in revenue for fiscal 2025. He expects those figures to improve to $19-million in Adjusted EBITDA on $96-million in revenue in fiscal 2026.

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